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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, ladies and gentlemen. Welcome to the First Quarter 2022 Matador Resources Company Earnings Conference Call. My name is Shannon, and I'll be serving as the operator for today. At this time all participants are in a listen-only mode. We will facilitate a question-and-answer session at the end of Company’s remarks.
As a reminder, this conference is being recorded for replay purposes, and the replay will be available on the company's website through May 31, 2022 as discussed in the company's earnings press release issued yesterday.
I will now turn the call over to Mr. Mac Schmitz, Vice President, Investor Relations from Matador. Mr. Schmitz, you may proceed.
Thank you, Shannon. Good morning, everyone, and thank you for joining us for Matador's First Quarter 2022 Earnings Conference Call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the company's financial performance. Reconciliations of such non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP are contained at the end of the company's earnings press release.
As a reminder, certain statements included in this morning's presentation may be forward-looking and reflect the company's current expectations or forecasts of future events based on the information that is now available. Actual results and future events could differ materially from those anticipated in such statements. Additional information concerning factors that could cause actual results to differ materially is contained in the company's earnings release and its most recent annual report on Form 10-K.
In addition to our earnings press release, I would like to remind everyone that you can find a slide presentation in connection with the first quarter 2022 earnings release under the Investor Relations tab on our website.
Finally, I would like to introduce the Management team joining me this morning. They are Joe Foran, Founder, Chairman and CEO; Billy Goodwin, President, Operations; Van Singleton, President, Land Acquisitions, Divestitures and Planning; Craig Adams, Executive Vice President, Co-Chief Operating Officer and Chief of Staff; Gregg Krug, Executive Vice President, Marketing and Midstream Strategy; Michael Frenzel, Executive Vice President and Treasurer; Tom Elsener, Executive Vice President, Reservoir Engineering and Senior Asset Manager; Rob Macalik, Executive Vice President and Chief Accounting Officer; Glenn Stetson, Executive Vice President of Production; Brian Willey, President of San Mateo Midstream; and Chris Calvert, Senior Vice President, Operations. Other members of the senior staff are also present and available to answer your questions.
And with that, I would now like to turn the call over to Mr. Joe Foran, our Founder, Chairman and CEO. Joe?
Thank you, Mac. And good morning to everyone, and thank for participating in today's earnings call. We very much appreciate your time and interest in Matador.
To begin this conference, I'd like point out three things. First is that we are celebrating, since February, our 10 years of being a public company. So this is the 10-year anniversary of our first earnings call. I hope we do better than we did then.
Second, I'd like to point out that we retired one-third of our aggregate debt, and we are now producing 100,000 barrels of oil or gas equivalent. And number three, that this growth that we've had, particularly this year, has not come from spending that much more on CapEx, but from better-than-expected growth from our various drilling programs and capital efficiency.
And with that, I turn to your questions. And Mac, why don't you lead off?
Sounds great. Thanks, Shannon. If you would turn it over to questions, that would be great.
[Operator instructions] First question is from Scott Hanold of RBC Capital Markets. Your line is now open.
Thank you all. And congratulations on the 10-year anniversary of being public. First, for my first question -- yes. For my first question, I was hoping we could talk a little bit about inflation. Obviously, it's a big conversation in the industry with both the OpEx as well as the CapEx side. But it looks like you all, at this point, have been managing it so far pretty well. Can you give us some sense of like what things you've been doing and where you think that might progress through the course of this year, especially if you look at the back half of the year and into 2023 when I think that most of the industry is a little bit more open to service price inflation?
Scott, this is Tom Elsener. Thanks for the question. We are seeing a little inflation, but it's still early in the year. So it's just hard to say exactly where things are going to be. But we're really proud of all of our operations teams, and I'm going to hand it off to Billy and Chris to talk about some of the detailed work they're doing on completions and drilling and production. But certainly, we think we can mitigate some of these cost increases later on in the year. Chris?
Scott, this is Chris Calvert, SVP of Operations. I think, obviously, it's a great question. Operationally, when we think about service cost inflation, I think the main ticket items are the cost of steel, the cost of fuel and the cost of sand. Specifically speaking to the cost of steel operationally, we are looking every day to push reducing -- eliminating a casing stream. We talked a lot about Stateline a long time ago. And we're looking to do that as we go back to Rustler Breaks as we go up into Lea County.
On the fuel side, obviously, the less amount of fuel that you use, the less exposed you are to the increase in fuel price. What we're doing is dual fuel. We're bringing in either field gas from our San Mateo partner, we're using field gas or we're doing CNG. And so that's another thing that we're doing to kind of reduce exposure to diesel.
And the last thing, I think, is just spending less time on wells. You have day rate components and rental components that add to the cost of the well. And what we can do there is just eliminate time on well. And so we've had record wells our Maxcom room. I think we're up to 162 records with Maxcom. And we're just spending less time on wells. What we learned down at Stateline, we've gone up to Rustler Breaks and we've really just kind of set records and spent less time drilling those wells, Scott.
Billy is President, have you all been processing this and other departments.
This is Billy Goodwin, President, Matador. And we've been working with our vendors, longtime vendors like BNL Pico, and they handle all of our casing and tubular goods, and they keep us supplied and stay out in front of everything, and we talk with them and we're covered for the rest of the year. We also worked with Patterson Drilling. They've drilled almost ever well Joe's ever drilled, I think, in first and second Matador. So that's been good and good relationship. And they work for us and work with us to ensure that we can get rigs and highest technology equipment on those rigs. And so we can get after and drill wells faster and faster.
And along with our other long-term vendors, Halliburton and Universal, they both helped us out, like Chris was talking about, with ensuring we've got plenty of sand and they stay out in front of that, and have agreements in place so we don't have any issues there. So all of those things together that helps us drill better wells faster. And like Chris also mentioned Maxcom. And shout out to those guys in keeping us in zone 90% to 100% of the time that creates better wells and more cash flow for the company, more reserves. And I don't know if Ned wants to say anything about Maxcom there.
Yes. Ned Frost, Senior Vice President of Geoscience, the Maxcom group has really done a good job. And Scott, I know you're familiar with them, but that's geoscientists and drilling engineers working around the clock together in our control room. They've done a great job of staying in zone. And as Billy said, the implications of staying in zone really lead to better well productivity, better efficiency, drilling these wells faster. Every hour you save turns into days that you save, and that really impacts the bottom line in the very favorable sense. But that room has done a great job for really helping Matador achieve the growth that we're seeing right now.
And then I'd like to follow up some of that, Ned. This is Joe again. I said about the Maxcom group. Those 162 records that we tallied, on some checking, we thought that added up to approximately $23 million in savings. And we have improved our time in the reservoir zones to 95% or more, which again leads to better-than-expected results.
So by this, Scott, that we're trying to emphasize that a lot of the things that Billy and his group are doing are sustainable because there are time savings and productivity increases and innovation. So we're -- of course, we're trying to address the effects that there will be inflationary pressure, but our guys are also finding ways to mitigate it and improve well results without spending more money.
This is Billy Goodwin again. I'd also like to throw in that with Maxcom working with the drilling program, we've also started seeing more and more 100-foot an hour drilling and where we used to be trying to drill a whole lateral with one assembly, now we're drilling curves and laterals and have seen this in each hole size or 6, 6.75 quarters inch hole size, 8.75, 8.5-inch hole sizes, all of doing equally as well and getting up over 13,000 foot with one BHA. So that's great. Vendors out there, improving technology and making the motors and bits better so we can do that, drill the curve and lateral with the same BHA. So hats off to all those guys as well.
It's great to hear that there's some durability in what we've been seeing so far. And as my follow-up and Joe, maybe this one's for you, but obviously, even since when you just reported fourth quarter earnings, the quantum of potential free cash flow for you all continues to increase on the back of your operations. And frankly, a big part of that is also commodity prices have risen.
And the way we see it right now, you may have maybe another $1 billion plus of free cash flow even after paying down revolver over the balance of the remainder part of the year. And so as you start looking at that and think about 2023, can you just give us a sense of like how do you look at utilizing that free cash flow and just give us a sense of like where the priorities are and what are the likely outlets of that are?
Well, Scott, that's a big question. And we were studying it from all different angles. The team is really working together, and we're getting ideas from all the different teams and all the different departments on what -- how we could best put this to use. But I'd say conceptually, the big plan is to continue to reduce debt. We think our business has changed to where it's advantageous to work down your debt as much as a reasonably possible without disrupting your operations group.
So the first priority is just reducing -- continuing to reduce debt. We think that's a good path going forward. And if these high prices sustain itself, we will reduce -- continue to reduce debt, not only this year but into 2023. The second thing is, as you may -- as you know, we're all large shareholders. Everybody in this room is a shareholder of Matador. We like dividends and we're happy to try to raise dividends, but we want to do it in a prudent fashion. And it's a little early to make a prediction of how much, if any, that we're going to raise dividends this year.
But if prices sustain themselves anywhere near this area, we certainly plan to have -- over the years to have a steady and consistent dividend policy that raises it and improves our returns to shareholders. And that's where most of that direction is. We're not -- we're going to be careful and we're going to maintain the same disciplined approach to where we spend money in our drilling programs and where we might spend it acquiring additional acreage. And we know this is a great opportunity. We want to make the most of it, but we want to do it in a very disciplined fashion that's attractive to our shareholders and strengthen the company financially.
So with those parameters, we're looking at a number of items and there are good ideas coming about. And we think it's a great opportunity and it gives us great options, and we don't want to be hasty and going into any one of those options, but be sure we've thought everything out so we can continue to add to the value of Matador and make it more valuable to our shareholders and make sure that we share some of the gains in cash flow we are getting with them and to keep up the good relations that we have with our banks.
Yes. And as you think about the fixed dividend and the return to shareholders in that matter, if you all have some kind of context on where you like to see that? Is there like a particular yield do you think that's appropriate for a company of your size and growth potential? Or is it a percent of past forward? Or is that still some of the decisions you're trying to figure out right now?
Well, Scott, I'd say both of it is that we believe in the fixed dividend. We believe in the steady growth of the fixed dividend, but you don't want to walk something back once you've raised it. So yes, we are steady again and meeting with shareholders, and discuss it as a Board, how much and when to raise the dividend and what circumstances are we going to be looking at. I mean you could declare -- peace could be declared overnight in Ukraine and Russian and you'd have a different set of circumstances.
So it's a little early to say exactly what we're going to do. But I think in general terms, as I tried to stress, we plan to consistently raise the dividend as cash flow permits. And we plan to pay down the debt as is prudent, and to stay as much as we can based on cash flow. And as you saw this year, we were able to not only have the drilling programs but to make a few acquisitions. And we weren't doing it by borrowing money, but living within our cash flow.
I appreciate that. Thanks Joe and team.
Our next question is from Neal Dingmann with Truist Securities. Your line is now open.
Good morning all. Thanks for the details. Joe, maybe my first question maybe for Billy or Tom, on the op side. I want to maybe tap the stats a little bit different way. I'm looking at Slide 5 where you guys very nicely show up the 2022 milestones, the time lines that you show for the wells. So again, everybody talks about the inflation.
But I guess my question around that, it doesn't appear like you guys are having any delays or anything on that nature regarding any of the services out there, right? Is that fair to say? Maybe if you could just talk about that time line a little bit and based on what may be the tightness of services, are there any challenges? It doesn't appear you're seeing any delays in it such, but I just want to double check that.
Sure. Neal, this is Tom. We -- on our time line for the year, we still feel really good about our plan and the major milestones that we've got set up for the year. We have a busy second quarter with Rustler Breaks bringing online 11 wells. And we're going to be back in Antelope Ridge, bringing on 16 wells later in the year in Q3. And then we'll -- we have a big tranche of Ranger wells coming up in Q4.
Things are looking good. As Billy will mention here in a minute, the teams are all working together. We're doing a great job transferring knowledge between these different asset groups, like some of the warnings we've had at Stateline, reducing casing strings and wondering how to install some better production with systems and warned about better targets with Ned's group. And so we're firing on all cylinders and things are going well, we just want to remain cautious, cautious for the year.
Neal, this is Billy. And I'll just back up what Tom saying there. I mean everyone is excited here. We're all working together. The land and geology finding -- our A+ rock there and bolt it up, our land positions and more opportunities for 2-mile and looking at 3-mile wells. And we're drilling faster and getting better. And all of our vendors are excited. New ideas, new technology. And some of that extra money we're spending there to get return to us and helping us to drill wells faster and mitigate the costs. So it's all good.
No. That's what it sounds like. I don't see any delays. And then maybe just one follow-up on midstream, maybe for Greg. I know part of your priorities you talked about or if you could talk about San Mateo. I know in your priorities you all talk about adding maybe some of the new San Mateo customers and earning and hitting some of those performance incentives. Could you just talk about -- you're certainly seeing some real nice upside on San Mateo, if you could just talk about that a bit more?
Neal, this is Brian William, the President of San Mateo. I'm happy to answer that question. It's a good question. So thanks for asking it. As it relates to third parties, we continue to see opportunities. It's a great market out there right now, and we see opportunities with new customers that are potential and as well as existing customers. And we look at the opportunities with existing customers as something that is really a testament to the great work of the business development team, the operations team here in the office and then also out in the field. They do a great job coordinating the efforts out there.
And so it's good to get this repeat business and how those opportunities. In particular, we mentioned the Maxcom earlier. On the San Mateo side, we also have a commodity control room where we're able to actually monitor many of the systems that we have and the pressures and make sure that no issues occur and -- where the flow goes. And we obviously have one of our third-party customers say that were the best controller they've ever worked with. So really good feedback and good working together with them.
On the incentive side, we -- I think we announced in the press release, we -- Matador received $23 million of incentives last quarter. We expect to continue to receive incentives as we operate in the San Mateo areas. And so -- and there's $15 million left on the San Mateo incentives we'll expect to get first quarter next year, and then the remainder of San Mateo two incentives that we continue to work towards, and that's one of our priorities.
Yes, Neal while we're in this area, the other thing that really pleases me about the midstream business is the amount of repeat business that we've gotten from customers, that customers -- clients have signed a deal, we'll gather or collect their gas water or oil, and then they re-up for additional commitments to sell to us.
And so we're really pleased with the work that Matt Spicer and team and James and the operating side has tried to make sure that they've given them really good service. And we think that's beginning to make a difference as you get additional when you get a customer to re-up again or to add to it. You feel like you find a mountain, and that's one of the check marks that we've long term that we've really tried to look at. Brian?
Thank you, Joe. The one other thing on that point is we also have a 3-pipe system, which I think is really unique out there in the Delaware right now. And so we've had customers that have been on one of the commodities, whether it be water, oil or gas, and performed well. And because of that, we've had opportunities to be able to service them on different commodities. And so I think that's a real good advantage for us as well with these repeat customers is having the different commodities, we serve all three and we're able to take care of everything that our customers need.
And another follow-up point that when you we're talking about the commodity control room, that goes 24/7. And so you're watching it night so you can give a quicker response. And that's been well received as well as a measurement room to be sure that the quantities are being paid right.
Thanks gentlemen. Thanks for the details.
[Operator instructions] Our next question is from Zach Parham with JPMorgan. Your line is now open.
Hey guys, thanks for taking my questions. Just following up on his earlier question on capital allocation. As you think about reducing debt further, what do you believe is the prudent level of debt to have at the company? Because with the free cash flow you're going to generate at strip this year, you could push debt to very low levels.
Zach, that's a very good question. And we're not really ready to present a plan to you or to the market or to our shareholders. Exactly what is the right amount of debt because it always depends on circumstances, and I'm not trying to dodge your question by saying, it depends on circumstances. But you could have a very different economy here in 6 months. There's a wide array of opinions on that. Same thing on the international situation. But paying down debt will be our default area. If we're not sure or don't feel strongly on putting it somewhere else, it'll be used to pay down debt because we will still have the options.
What is exactly the end number, I can't tell you at this time. We're reviewing a number of different scenarios. And the Board plans to take it up this summer and early fall, and we'll have more detail plans at those times as we see how long the situation gets. But we do want to get that to a level for where we think we'll be in good shape always if and when the commodity prices turn the other way.
So this is a great opportunity to take advantage of that. We think we have reached a new inflection point with our size. We've been traded up there when we were in the higher 50s approaching $7 billion. And so we just don't have to take the chances that we once did when we were under $1 billion.
And that we think that gives us an operational advantage, and we want to be known as a -- we think the stronger financial shape should make us more attractive to the generalists coming back into the market. And that when you pay down debt, the advantage it has over just buying back stock is when you buy back stock, whoever sells you the stock generally exits your company as a shareholder, it goes on to another deal. But when you pay down debt, that helps all shareholders, particularly your long-term shareholders, and strengthens the company and increases the opportunities that you have. It just -- that's good for everyone. And that's why it's our default.
We'll look at other uses of money, but -- and certainly, at the time we're reducing debt to be sure we're allocating some for the shareholders and the growth of the return to the shareholders. So we want to grow that return to the shareholders, and we want to reduce debt, and we think we can do both at the same time and still maintain our active drilling program with these very good locations that the teams put together and presented to the Board and to the senior staff. So that's a really exciting period for us, and we see this as a time to make the most of these opportunities and help push us to the next steps for Matador's growth and value plan.
Got it. I guess just following up there, you also mentioned -- earlier you mentioned reducing debt and raising the dividend as what you would do with free cash flow. Are you considering anything else, potential special dividends or variable dividends?
Zach, those, of course, are in the conversation. And we're not saying we're going to do it. I mean, right now, we probably lean in the direction of first taking care of existing shareholders through increasing dividend, allocating for increasing the fixed dividend and taking care of debt. But special dividends, variable dividends are in the conversation and we're studying other companies who are doing that and to see how well it works for them. And we don't mind following the practices of other companies if they seem to be working better than what we're doing.
So we're -- we have a saying around here, we always reserve the right to get smarter. And at this time, the focus is on fixed and dividends and repaying debt. But we're -- certainly if that seems to be working for other companies, we'll be quick to adopt it.
And maybe just one quick follow-up. You all paid a little bit in cash taxes this quarter. Can you talk about how that should trend through the rest of the year?
Yes. Well, Zach, we play a straight game around here. And if it comes to where we owe taxes, of course, we're going to pay our taxes and we're going to be compliant with that and we consider that a high-class problem. I mean -- and we were pleasantly surprised in a strange way that we were in a tax position because earlier in the year, we thought we would go through 2022 without needing to pay taxes. But it came upon us, we were more profitable than had originally conservatively forecast. And so coming into taxes has -- it's a high-class problem.
Now it's important to remember that while it shows $15 million, that's not cash out the door $15 million, that's if things go this way, that would be the proportionate share one quarter of what we might expect to pay if oil remains at $100 a barrel. So that number is going to change, either up or down, depending how the rest of the year goes. But I'd like to turn to Rob. Rob would you add to that?
Yes. This is Rob Macalik, Chief Accounting Officer. I think you said it well, Joe. I think that, that is just the proportionate share in the amount of cash that actually went out the door is something much lower than that. There are a lot of variables when you're looking at deductions and we're -- like Joe said, we play a straight game. We're going to take all the deductions that we're allowed to take and continue to monitor the situation throughout the year.
Yes. But we're not going to do any exotic plans or execution to try to avoid dividends. It's better to -- I mean, to avoid taxes. We're going to -- it's better just to pay the taxes and go on and do what you're supposed to do. I would like to ask Michael just to comment on the debt and the dividend plans and that they were considering other things. But that's your...
Hey Zach, this is Michael Frenzel, Executive Vice President and Treasurer. One thing I wanted to add, Joe, we've said it consistently before, but I think a potential use of free cash as we have used our cash in the past. I think we'll look at trying to find some accretive bolt-on opportunities just like the one that we talked about or the ones that we talked about last quarter up in Lea County, where we were able to put a rig to work.
And from your nice note that you put out on the Uncle Ches wells, I think it's pretty obvious why we ought to be excited about that area and getting to work there. I know Tom or -- could certainly comment on why we're excited about that area. But I think that's something, as we have done throughout our history, that we'd consider as a potential good use of cash.
Yes. And just to back up what Michael said when our geoscience and other teams come up with new ideas to try this one or that zone that may open up areas just like they did on Uncle Ches well, we're going to give that serious consideration and have it in the conversation, too. So we want to always reserve that right to get smarter. And again, we're shareholders, so it's spending our own money and we're going to be careful with that and take advantage of this I think unusual time in our business and keep it cash policy.
Thanks for the answers.
Thanks, Zach. And call anytime if you all want further updates. I say that to you and to Neal and to Scott and others that, look, we're open and ready to visit with you all anytime you have a curiosity or want to know more about what we're planning to do.
Our next question is from Michael Scialla with Stifel. Your line is now open.
Hi, good morning guys. Most of my questions have been asked, but just wanted to follow up on, Michael, you mentioned Uncle Ches wells that looked like a very strong performance out of those wells. Just curious if you do anything differently with the completion design there? Is that just a result of very good geology? And any opportunities to -- I know you got a couple of more wells you're drilling in that area, but to, as you mentioned, acquire additional properties there or move -- accelerate in that area?
Mike, this is Tom Elster. Yes, as Michael alluded, we certainly are very proud of our Uncle Ches wells. And we think that those types of wells show off why we're excited to be putting a rig to work in the Ranger area and why we continue to look at opportunities up there. Certainly, the very, very high oil cut is something that really stands out, but also the very low water cuts are certainly something that we think are important to us. We're always looking at ways to get better though. We're always looking at ways to complete the wells with good stimulation jobs with good profit and good fluid.
And obviously, we work very closely with the geology team to put our wellbores in the best possible rock. And my hat is off to Ned and the geoscience team and to Maxcom for constantly looking at ways to make the most of the opportunity we have in front of us. We are certainly running our sixth rig up in that area, and we'll be active in there for many years to come.
That’s all I had.
Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call. I'd like to turn the call over to management for any closing remarks.
Right. Two other points I'd just like to end this where I didn't get a question on it, but we have two other assets that sometimes don't give necessarily a lot of mention. And the first one is just the value of the Midstream, not only from the capacity of taking away from our deal, but enabling us to predict the time when we would complete those and how that affects cash flow. And second, for the environmental purposes that it has of that reducing.
And I'd like Glenn just to say a few words on the improvement and perhaps, Cliff, on the environmental area, how much we’re recycling and how much we cut down on admissions.
Yes, on the emission side, we're definitely very focused on doing everything we can on the production and completion side to reduce our footprint. We released our first sustainability report at the end of last year. And in that, we showed a 19% reduction in greenhouse gas emissions from '19 to '20. We're focused on year-over-year improvement to that and look forward to Shelly -- Shelly Appel has kind of spearheaded that project, and she's working on our 2021 report now.
On the production side, the biggest focus we have is getting our liquids on pipe. Today, we have 98% of our gross operated water on pipe and over 80% of our oil on pipe as well. That also helps in terms of flow assurance and talking about some of the impacts that are made. The impacts that some of the labor shortages have in the basin, we can mitigate that with not having to use trucks. The increased use of vapor recovery units helps both on the production side and reducing the amount of gas that we flare. And certainly, in an environment where natural gas is trading at these levels, it's very advantageous.
Another thing that we're doing that helps on the lease operating expense side as long -- as well as helps on the emission side is where we don't have -- where we are using on-site electrical generation, converting those wells to grid power. And so it's kind of a win-win situation there where we reduced both admissions and lease operating expenses.
On the flaring side, we are currently -- when you look at gross operated production versus gross operated volumes flared, we're right around 1% now. We have seen year-over-year improvements from that from 2019 to 2020 and further again in 2021. That, again, we'll publish later in the year. And also want to kind of give a plug for San Mateo in that having the part of what has contributed to the reduction in flaring is the fact that we work very closely with our Midstream partners, specifically San Mateo, in that we -- they are there from day one when we go to turn on our wells, and then also the amount of firm transport that they have and the operations of the plant and the communication that we have between teams really is very helpful in terms of making sure that we always have a home for our gas.
Thanks Glenn. This is Cliff Humphreys, SVP of Completions. And I just wanted to comment to Joe's note on the increased recycled water usage. Since 2015, the completions group is really trying to exercise every avenue to use more recycled produced water in our fracs. And I think our partnership with San Mateo just allows us to do that, that much more as the infrastructure expands in New Mexico. For example, this quarter, we used just under 5 million barrels of recycled produced water in our completions, which is the most we've ever done in any quarter. So we see that continuing to increase, and its great cost savings as well as a great ESG effort, and it results from the good partnership we have with San Mateo.
And so obviously, the Midstream is increasingly importance to us. And then the second asset is our remaining gas assets in Northwest Louisiana. We've been drilling non-op wells with various operators, most recently with Chesapeake, bought on a well 25 million a day, which we had a quarter. So still a lot of Haynesville to be drilled over there.
But second, when we made the deal with Chesapeake, we reserved all the uphole rights, which included the Cotton Valley. And we believe there's some over 200 Bcf, billion cubic feet, of reserves there. They're all held by production. They're just awaiting a consistent gas price that you knew would stay and we could easily set up a drilling program there. But right now, it's HBP. It's not going anywhere. It is a valuable gas bank for future activity sometime.
So I just want to mention those assets, look behind. And again, invite everyone, come see us. We'll be happy to meet with you. We'll be happy to answer your questions and appreciate all your support and participation with us.
Ladies and gentlemen, thank you for your participation today. This concludes today's call.